[Congressional Record (Bound Edition), Volume 150 (2004), Part 6]
[House]
[Pages 7050-7055]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               THE BUDGET

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from South Carolina (Mr. Spratt) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SPRATT. Mr. Speaker, as we meet tonight, this country, our 
government, is headed towards a deficit of $521 billion. That is not my 
estimate, that is the estimate of the Office of Management and Budget, 
the President's own budget shop. We have watched the initial returns 
from April 15 come in to see if there might be a revenue surprise, a 
bounce that will alleviate this problem, and thus far there is no early 
indication that there are any surprises coming. We are stuck with a 
$521 billion deficit this year.
  Now, that would be bad by itself, $521 billion is a record deficit, 
but it is worse when you put it in context. Our budget, the budget of 
the United States, was in surplus by the amount of $236 billion as 
recently as the year 2000; in surplus by $127 billion in the year 2001, 
when Mr. Bush came to office. Indeed, he inherited a fiscal situation 
unlike any President who has taken office in recent years, yet now we 
find ourselves, 3 to 4 years later, in deficit by $521 billion.
  The administration portrays itself as the hapless victim of 
circumstance. In truth, it is a victim of policies that it itself has 
chosen. It is a victim of the consequences of these policies which it 
has freely put in place against the warnings which they failed to heed 
on all sides. What we have had to witness here is painful for those of 
us who have committed our careers in the Congress, and I have been here 
for nearly 22 years, to putting the budget in balance and 
institutionalizing conservative fiscal policy. We have been forced to 
witness 15 years of fiscal discipline, 15 years during which we took a 
deficit of $290 billion and moved it into surplus, become this huge 
deficit in just the last 3 years.
  As Yogi Berra used to like to say, you can look it up. This is a 
matter of historic record. Every year during the Clinton 
administration, for 8 straight years, the bottom line of the budget got 
better. It moved out of deficit into surplus. Every year for 8 straight 
years it got better. Every year, for the last 4 years, the bottom line 
of the Bush administration's budget has gotten worse and worse and 
worse, until we now find ourselves with a budget deficit of over $520 
billion this year.
  The Congressional Budget Office took the President's budget in 
February of this year, as they are required to do, and in March they 
sent us their analysis of that budget. They told the Congress that if 
we adopt and implement the President's budget as he has proposed it, 
then over the next 10 years the Federal Government will accumulate 
$5.132 trillion of additional debt to be added to the $7.4 trillion of 
debt we already have, and in which case we will leave our children a 
negative legacy of unheralded, unprecedented proportion. We will be $13 
trillion in debt on top of a Social Security program that is 
underfunded and on top of a Medicare program which is even more 
underfunded.
  Now, just as a preface to other remarks that other Members are going 
to make, let me give a quick summary of where we are. This was the 
surplus that was projected for this year, $397 billion, only 3 years 
ago. This is what CBO says it is going to be: $477 billion. If you want 
to see a roller coaster ride, here it is: $290 billion. That is the 
deficit the Clinton administration inherited. They turned it, through 8 
years of fiscal discipline and unrelenting attention to the deficit, 
which is one of the top priorities of the government, to a surplus of 
$236 billion, the largest in the Nation's history.
  This is what has happened since Mr. Bush came to office: A 
precipitous decline from a surplus of $236 billion to a deficit of $477 
billion, according to the Congressional Budget Office. And here is the 
dire prediction for the future: There will be a little bounce, a little 
uptick due to the economy, but the prediction of the Congressional 
Budget Office is that these numbers will only deteriorate over time.
  We developed during the 1990s a series of budget process rules that 
helped us bring to heel these deficits, diminishing every year and 
moving the budget so into surplus. They were embodied in an act called 
the Budget Enforcement Act of 1990. A lot of people scoffed at this. I 
was here. They said Congress is dodging the problem again. They are 
coming up with procedural rules instead of substantive changes in the 
budget. But two of the rules we adopted were of signal success. One was 
a rule called PAYGO, which I will come back to in just a minute. The 
other was a rule called discretionary spending caps.
  In effect, what we did was impose a numeric or dollar cap every year 
for 5 successive fiscal years on discretionary spending, the amount of 
money that we appropriate every year in 13 different appropriation 
bills. That is different from entitlement spending, which is mandatory 
spending and is not changed annually. The discretionary spending caps 
were imposed in 1990 in an agreement we made with the current President 
Bush's father and reimposed in 1993. When President Clinton came in, a 
new set of numbers was imposed as our targets, or mandatory ceiling on 
spending, and then finally in 1997 they were extended once again. They 
worked.
  But there was another rule that worked even more significantly, and 
that was the PAYGO rule. The PAYGO rule simply stipulated this: It 
provided that if any Member of the House or any committee wanted to 
increase an entitlement, then it had to be paid for. That simple. It 
had to be paid for, or another entitlement had to be cut by a 
commensurate amount so that the effect of that enhancement in benefits 
was neutral upon the deficit, the bottom line of the budget.
  By the same token, the PAYGO rule applied to taxes, and tax cuts in 
particular. And what it provided was that if you want to bring a tax 
cut to the floor of the House while we have a budget deep in deficit, 
then it cannot have an impact upon the deficit and make the deficit 
worsen. You must do one of two things: You must either identify another 
tax increase to offset your tax decrease, or take some permanent 
spending, entitlement spending, and cut it by an amount over 5 years 
equal to the amount of our revenue reduction affected by the tax cut. 
That was the so-called PAYGO spending rule.
  We are going to talk about that tonight, because one of the bones of 
contention right now in the budget resolution conference, which is 
ongoing, is whether or not we should take those rules, which were 
developed and successfully employed in the 1990s, to the extent that we 
put the budget back in surplus, take them in the form that they were 
proposed and used in the past, or whether we will take some faint 
facsimile of those rules and impose it.
  In particular, when the House passed the Republican resolution 
several weeks ago, they included in it the recommendation that a PAYGO 
rule be reinstated, but it was a one-edge PAYGO rule. It applied only 
to entitlement increases. It did not apply to tax cuts. Even though an 
entitlement increase

[[Page 7051]]

has the same impact as a tax cut upon the bottom line of the budget, 
the tax cut aspect was left out. So it is half a loaf, half a bill, and 
half a rule.
  One of the reasons that the budget resolution is stuck in conference 
right now is that there are others in the other body who disagree with 
that position, who realize that we have an intractable problem on our 
hands, and apt to get worse unless we do something dramatic and develop 
a plan to deal with it. For starters, we have two proven rules, rules 
that worked in the 1990s, a PAYGO rule being one of them, and there are 
lots of us who would like to impose those rules again so we can begin 
attacking this horrendous problem.
  And not just for our generation. No, the real problem of the deficits 
occurring today are for our children and grandchildren, because we are 
shoving off onto them the debt with a budget that we will not fully 
fund ourselves.
  Mr. Speaker, I would like now to yield to the gentlewoman from Nevada 
(Ms. Berkley) for comments along the lines of the PAYGO rule and other 
aspects of the budget.
  Ms. BERKLEY. Mr. Speaker, I thank the gentleman from South Carolina 
(Mr. Spratt) for allowing me to speak on this very critical issue. As 
he well knows, I voted for the first Bush tax cut, and I voted to 
eliminate estate taxes and to eliminate the marriage penalty tax, so I 
am hardly opposed to cutting taxes. But I do rise tonight to voice my 
strong objections to the Republican budget, which threatens increased 
deficits and neglects many of our Nation's top priorities in favor of 
continued and irresponsible tax cuts.
  The President and the Republican leaders of the House talk about 
their commitment to reducing the deficit and the tax burdens on 
families, protecting the security of our Nation, guarding the Social 
Security Trust Fund and improving the health care and education systems 
in this country. However, when it comes to funding these important 
initiatives, their words are simply not supported by their deeds.
  The 2005 Republican budget proposal is reckless, in my opinion, 
fiscally irresponsible, and filled with misguided budget priorities. 
Let me give some examples.
  The Republican budget drastically cuts nearly all domestic programs 
after 2005, an interesting date since the election is 2004, including 
cuts to critical education and training programs, health care and 
environmental programs, and veterans' medical programs. Additionally, 
we are a country at war, yet in his budget the President provides no 
funding for the war in Iraq. This simply defies logic.
  This Nation has gone from a projected $5.6 trillion surplus in 2001 
to a projected $2.9 trillion deficit in 2011, as the gentleman so 
eloquently stated in his opening remarks. This year's deficit is fast 
approaching $500 billion and will only continue to grow under the GOP 
budget.
  Ultimately it is our American families that are going to pay now and 
will continue to pay for this administration's fiscal irresponsibility. 
American baby boomers and retirees will suffer greatly under this 
Republican budget. The Republican proposal spends the entire $1 
trillion Social Security surplus from 2005 to 2009 by creating 
additional and unwise tax cuts. The total cost of the Republicans' 
latest tax cut is more than enough to make up for the Social Security 
and Medicare solvency for the next 75 years.
  Foolish spending threatens the livelihood of hundreds of thousands of 
retirees in my home State of Nevada and millions of retirees across 
America, not to mention the financial security of future generations. 
But as my colleague from South Carolina knows, perhaps the most 
egregious cut of all are the cuts in funds to our veterans' programs.
  As thousands of brave men and women are fighting for this country in 
Iraq, in Afghanistan, and elsewhere abroad, it is outrageous that the 
Republican budget calls for cuts in funding for veterans' programs.

                              {time}  2045

  Mr. Speaker, the House Republican budget provides $1.3 billion less 
than what the Committee on Veterans' Affairs on which I serve has 
determined is needed just to maintain vital health care programs for 
our veterans. All of these cuts are certain to result in decreased 
spending on long-term care programs, which veterans in Las Vegas and 
throughout the country depend on. Many aging veterans in Las Vegas 
require more care than their families can provide. Our veterans must 
know that they can count on our VA to supply the care they have earned 
through their military service.
  Those on the front line who are sacrificing their personal safety 
should not have to worry that the VA budget cuts will deny them the 
quality health care they need and deserve. We must send them a message 
that we are indebted to their sacrifices and that we remain committed 
to our promises to increase funding levels to meet their needs in Las 
Vegas and throughout the Nation.
  We have all heard Republicans talk about their commitment to 
education. Yet their budget provides $8.8 billion less than what is 
authorized for education programs in the Leave No Child Behind Act. 
This lack of funding will mean cuts in such vital initiatives like 
drop-out prevention programs and after-school programs. These programs 
are especially important to my district and the community of Las Vegas 
that I represent because we have one of the highest dropout rates in 
the Nation.
  Republicans also shortchange higher education in their budget. The 
Republicans propose to freeze the Pell grant award level for the third 
year in a row, making the dream of higher education unattainable for 
thousands of lower- and middle-income students. These are the very 
people that I represent. They are first generation college goers who 
want to go to Nevada colleges and universities, and they cannot afford 
it without Pell grants.
  Families in Las Vegas and across the country will receive little 
assistance in obtaining health care coverage under this budget. The 
Republican plan forces severe cuts in the Medicaid program, shifting 
most of the cost of Medicaid onto the States, many of which are 
already, like the State of Nevada, facing their own fiscal crises. In 
Nevada, this shift would result in children, the disabled, and families 
being cut out of the Medicare rolls, as well as reduce benefits and 
increase cost-sharing for those who need the assistance the most.
  The Republican budget also cuts training for nurses. Without adequate 
training for nurses, Nevada, which has the lowest ratio of nurses to 
the population, will be unable to hire the trained nurses needed to 
provide quality care. But despite all of our needs, despite the cuts in 
education and veterans benefits and health care, all of the issues that 
make quality of life in this Nation, and certainly in my communities, 
important, the President has called for a nearly $900 million increase 
in funding for the Yucca Mountain project, which will result in 77,000 
tons of toxic nuclear waste being dumped in Nevada less than 90 miles 
from Las Vegas.
  The President's call for this additional funding flies in the face of 
his repeated promises to protect the security of the United States here 
at home in the wake of September 11. Under the Yucca Mountain project, 
thousands of shipments of nuclear waste would cross this Nation on 
their way to Nevada. One terrorist attack on a shipment could unleash 
high-level nuclear waste, the most deadly substance known to man, 
potentially threatening lives and causing billions of dollars in 
environmental damage.
  The Republican budget is a blueprint for disaster. While the 
President and the Republican majority talk a good game, our veterans 
and our students and teachers and police officers and fire fighters, 
our nurses and our seniors will all suffer as a result of the misplaced 
priorities inherent in this 2005 Republican budget.
  When I came to Congress, I came to represent the people of southern 
Nevada. If we do not speak up and if the rest of Congress does not join 
you in this clarion call to take another look at this budget and do 
what is right by our American citizens, who will speak

[[Page 7052]]

out for them? I want to thank the gentleman from South Carolina for 
sharing with the American public exactly what is going on in this 
Chamber and hopefully changing minds so we can get some fiscal 
responsibility and do what is right for the people we represent.
  Mr. SPRATT. Mr. Speaker, I yield to the gentleman from Maine (Mr. 
Allen).
  Mr. ALLEN. Mr. Speaker, the people of South Carolina are well served 
by the gentleman from South Carolina (Mr. Spratt) for the clarity that 
he brings to this debate on the budget, a far cry, I might say, from 
what our friends on the majority side of the aisle have been doing.
  When we start talking about PAYGO rules, it may sound technical and 
difficult to understand, but it really is not: pay as you go. It is 
very simple. Everyone should be able to get this.
  The rules that were in effect from 1990 to 2002 provided if a Member 
of Congress wanted to increase spending on a certain item, then he 
would have to decrease spending on another item or have a tax increase 
to pay for what he wanted to do. If, on the other hand, a Member of 
Congress wanted to propose a tax cut, he would have to at the same time 
reduce spending or he would have to increase some other form of taxes. 
Very simple, pay as you go.
  It should not be hard, but the Republicans here have done something 
quite astonishing. They used to claim they were fiscal conservatives, 
and they still do, but they clearly are not because they have forgotten 
the basic connection between expenditures and revenues, between money 
coming in and money going out. Every American knows this relationship. 
In our personal budgets, we have money coming in and we have money 
going out. The money that we spend on things, they have to be in 
balance, or we wind up in great trouble. Everyone who has a business of 
any size knows you have money coming in and you have money going out, 
and they have to be in balance.
  Only here in Washington does the Republican majority suggest that the 
revenues, the money coming in, do not matter. You do not even have to 
think about that; all you have to focus on is spending. The gentleman 
from South Carolina (Mr. Spratt) has a chart that shows that spending 
as a percentage of our gross domestic product actually remains low 
compared to the past; but it is receipts, tax revenues, that have 
declined so dramatically.
  Mr. SPRATT. Mr. Speaker, this is a bit difficult to follow, but once 
you understand it, it is a very graphic chart.
  Basically what this shows is in the red line at the top is a course 
of outlays from the 1980s through the current period, 2004. What 
Members see here is when President Clinton came to office in 1992-1993, 
spending was at 22.5 percent of our gross domestic product. Federal 
spending constituted 22.5 percent of our GDP. That is about the point 
at which President Clinton came to office, and this may be a surprise 
to some people, but because of budget discipline, because of PAYGO, 
because of the discretionary spending caps, two different budget plans 
in 1993 and 1997, every year outlays came down. At the same time, we 
enhanced revenues. That is the politically polite way to put it. We 
increased the revenues to the government. They came up. At the point at 
which they crossed as a percentage of GDP, you have balance for the 
first time in 30 years because we worked on both sides of the ledger, 
adding revenues, holding back spending. We had a balanced budget for 
the first time in 30 years.
  CBO, the Congressional Budget Office, was to look back on this period 
with some astonishment and appreciation and say 48 percent of the 
success achieved in eradicating the budget deficit during the 1990s was 
due to revenue increases, 52 percent was due to spending curbs, cuts, 
and decreases. There we have it right there.
  Outlays continued to go down, and receipts continued to come up; and 
the difference between the two right there is the surplus that we had 
in the year 2000, $236 billion. But the blue line here, receipts 
plummeted with the tax cuts. The recession, plus the tax cuts, caused 
receipts to plummet while spending went up. We have the exact opposite 
of what we need in fiscal policy in order to bring or keep the budget 
in balance. We have increasing expenditures and decreasing revenues.
  The Cato Foundation, which is probably the most conservative think 
tank in the United States, certainly in Washington, D.C., the Cato 
Group has said the Bush administration has succeeded in creating a 
fundamental mismatch at the base of our budget. They say we have Big 
Government spending and Little Government revenues, and the result is 
the deficit.
  Mr. ALLEN. Mr. Speaker, the gentleman has a chart projecting future 
years, but one thing that is striking about the first 3 years of the 
Bush administration is outlays. Spending, has risen from 18.5 percent 
of gross domestic product up to over 20 percent of gross domestic 
product. So there has been an explosion in spending. At the same time, 
there has been a dramatic reduction in revenues. They have fallen from 
roughly 20 percent of gross domestic product down to about 16 percent 
of gross domestic product.
  In fact, today, as we stand here today, Federal revenues as a 
percentage of our economy, Federal revenues as a percentage of our 
gross domestic product are at the lowest level since 1950, and there 
are Republicans in this Chamber who will say the problem is spending, 
but revenues are at the lowest level since 1950.
  I would like to close with a quotation from the majority leader. He 
had a press conference 2 or 3 weeks ago, and he finally revealed in all 
of its confusion the underlying Republican philosophy and I use the 
word not information, not evidence, but philosophy. Here is what the 
gentleman from Texas (Mr. DeLay) said: ``We, as a matter of philosophy, 
understand that when you cut taxes, the economy grows, and revenues to 
the government grow. The whole notion that you have to cut spending in 
order to cut taxes negates that philosophy, and so I am not interested 
in something that would negate our philosophy.''
  Listen to that again: ``We, as a matter of philosophy,'' not as a 
matter of economics, not as a matter of information, not as a factual 
matter, ``We, as a matter of philosophy, understand that when you cut 
taxes, the economy grows, and revenues to the government grow.'' Not 
true. CBO has made it clear over and over again that when you cut 
taxes, you cut revenues. Only in very, very rare historical 
circumstances, and the Kennedy tax cut may be one of those, only in 
rare historical circumstances can you cut taxes substantially and have 
revenues to the government actually increase.
  But then we have this other statement which is really revealing. The 
gentleman from Texas (Mr. DeLay) stated: ``The whole notion that you 
have to cut spending in order to cut taxes negates that philosophy, and 
so I am not interested in something that would negate our philosophy.''
  Mr. Speaker, I am old enough to remember ``Dragnet.'' I am old enough 
to remember Jack Webb, the L.A. detective who, whenever he was 
interviewing someone, said, ``Just the facts, ma'am. All I want is just 
the facts.''
  What the gentleman from Texas (Mr. DeLay) is saying, do not bother me 
with the facts; I do not want to hear the facts because we have our 
philosophy, and our philosophy says we do not have to pay attention to 
the facts.
  Great damage has been done to the country because the Republican 
majority in this House, President Bush and his Cabinet and members of 
the Senate, have not made economic sense. They have not paid attention 
to the simple fact that if we have huge tax cuts for the wealthiest 
people in this country, we reduce government revenues and drive us into 
deficit, and that is what they have done to this country. They are 
funding these tax cuts on the backs of our children because when the 
revenues are way below the spending, all they do is borrow. They are 
borrowing from our children in order to give the richest people in this 
country tax cuts, and nothing can make that philosophy make any sense. 
It is time, frankly, it was changed.
  Mr. SPRATT. Mr. Speaker, I yield to the gentleman from North Carolina 
(Mr. Etheridge).

[[Page 7053]]


  Mr. ETHERIDGE. Mr. Speaker, I say with all sincerity to the gentleman 
from South Carolina (Mr. Spratt), he brings a lot of common sense to 
this body.
  Mr. Speaker, I was in business for a number of years before I came to 
Washington.

                              {time}  2100

  There is one thing that I learned very quickly. If we drive the debt 
up, soon enough we will go broke. As some of my folks at home will say, 
we cannot borrow ourselves rich. And we are trying to do that. And I do 
not think anyone in this body can believe we can keep running deficits 
this large.
  I just ran some numbers on the material the gentleman provided us. 
Just going out to 2009, in 2004 a family of four spent about $4,380 on 
average in debt in this country. But by 2009 that will be $6,985 just 
using the current numbers. That is assuming, Mr. Speaker, that things 
do not change for the worse. That is using the best numbers I 
understand for the economy to grow and then no more tax cuts that are 
proposed in the current budget or revenue losses. That is a 59 percent 
increase in the debt load on families.
  Today I was in two schools talking with children about the importance 
of reading, about their future, about how important it was to do the 
things right to make a difference, looking into those faces and 
thinking what a burden we are placing on them. It is a shame because my 
colleague from Maine is absolutely right. We are using borrowed money 
from our children to enjoy the good life on a credit card; and we are 
taking the Social Security trust funds from the seniors who are now 
waiting for the benefits and using that, and between those two issues, 
we are living the good life and we are not paying our way. We are not 
paying our way. And it is wrong any way we cut it. It would be wrong if 
we were doing it as Democrats, and it is absolutely wrong for our 
Republican colleagues to stand with a straight face and say we are 
giving them prosperity. Because I promise this: I was in business when 
I remember interest rates going through the roof, and I will promise 
tonight that this kind of policy is going to drive interest rates up 
again. And all the money that we are borrowing to feed this deficit, a 
large portion of it is coming from overseas.
  It startles me and shocks me and baffles me, too. I am not really 
sure the American people understand that they are going to have the 
Chinese setting our interest rate at some point because they are buying 
a lot of this debt and a lot of our trading partners around the world. 
And ultimately we are going to have to meet that bill. When we look at 
the amount of debt today without any changes and where it is going to 
hit, I am not sure our colleagues or the people who might be watching 
us tonight know what PAYGO is. They do not know what it is. But I tell 
the Members what they do know. They know that we cannot spend more than 
we have. And they understand that, as many of the farmers in the 
gentleman's State and my State who have seen their tobacco allotments 
cut in half, there is one thing they know tonight: they are not 
spending as much this year as they spent 5 years ago, and they are not 
going to spend as much next year because they are going to have to cut 
their spending back to meet their revenues. What our colleagues tell us 
is that we can have it all. We can have it all.
  We cannot have it all. If we do, our children are going to be the 
poorer for it. And this budget, if it comes back without a plan to 
balance on both ends, on revenues as well as expenditures, we are doing 
an injustice to ourselves but a greater injustice to our children. And 
those children, I looked in their faces today. That is why they tell us 
we cannot build schools. We do not have the money. And yet we say to 
these children they are the ones we are going to depend on to build a 
bright future we want to see in the 21st century.
  I thank the gentleman for bringing this to our attention tonight and 
for sharing with this body and with the people around this country, 
because they need to understand that this plan is headed for a train 
wreck. It may not be this year, it may not be next year, but it is 
coming. We cannot keep piling on debt and not paying the bills, and 
that is really what is happening.
  And it is amazing to me that this administration in this short period 
of time will increase the debt at this level and this Congress has 
added to it. And the majority knows they have done it. They just do not 
want to stand up and meet their obligations. Because higher interest 
rates will eat away all the benefits that middle income and others have 
had. We may have lower interest rates today, but we let them add two 
points or three points, and that will happen. It may not be this month, 
it may not be this year, but I guarantee it will come in the next 
several years.
  I thank the gentleman.
  Mr. SPRATT. Mr. Speaker, I thank the gentleman from North Carolina 
for his comments.
  I yield to the gentleman from Oregon (Mr. Blumenauer).
  Mr. BLUMENAUER. Mr. Speaker, I thank the gentleman from South 
Carolina (Mr. Spratt) for yielding. I appreciate his leading these 
discussions on one of the most important issues that simply does make 
some people's eyes glaze over; but I think he has documented simple 
declarative sentences, and it does not have to be this hard.
  It is very clear that we are on a path here to have a massive 
increase in the debt tax. We are, in fact, abandoning principles that 
some of our friends on the other side of the aisle have in the past at 
least given lip service to.
  I came over to the other side of the aisle this evening to see if it 
felt different somehow, if the numbers added up differently. They do 
not. I think, in fact, the information that the gentleman has gotten 
with his staff, and referring to accepted experts, institutes, 
independent analyses, suggests that even the situation that he 
documented a moment ago that was calculated according to the official 
rules that CBO has to follow actually disguises the true depth of the 
problem that is being created.
  I wonder if the gentleman has some information about what the people 
who are using the artificial rules that Congress has given to CBO, 
assuming some of these taxes are going to be expiring and never be 
renewed, I wonder if he has some information that independent analyses 
would offer up for what the long-term budget outlook is likely to be.
  Mr. SPRATT. Mr. Speaker, we do indeed. I was just looking for the 
chart that is most applicable. This is one right here. And what we have 
done here on the bottom line is we have taken, first of all, the 
baseline projection of the Congressional Budget Office; and as the 
gentleman noted, they have to assume certain things because those are 
the rules handed down to them by law.
  But we have adjusted their projection for political reality. For 
example, we have assumed that there would be some continuing 
expenditures for Iraq and Afghanistan. We have assumed that many of the 
Bush tax cuts when they reach the expiration date, because most of them 
have implanted in them a sunset expiration date, that is the way they 
will pass to begin with, that most, when they reach that sunset date, 
will, in fact, be renewed and therefore the revenues will not be 
recouped. When we do that, what we find is that the deficit improves a 
bit. We get a bounce from the recovery we are experiencing right now. 
We are not stuck at 521. It improves to about $389 billion next year 
and then bottoms out in the range of the mid-$300 billion level until 
we get to the far end of our table, at which point it declines again to 
about $500 billion. So, essentially, we tread water.
  The deficit does not get better. And this is a point everyone should 
understand: the Congressional Budget Office, the Office of Management 
and Budget, in making these dire predictions of unending deficits, this 
assumes a growing economy, a robust economy, growing at 3, 3\1/2\ 
percent a year, even more this year. And notwithstanding the growth, 
the budget does not grow out of the deficit. It assumes that the 
economy will be on a pretty even keel for all of this period of time 
and still we will have these deficits when we know, as the gentleman 
from North Carolina

[[Page 7054]]

(Mr. Etheridge) just said, I do not think this economy can sustain the 
growth rate we are at right now with the deficits of the magnitude that 
we are looking at.
  Mr. ETHERIDGE. Mr. Speaker, will the gentleman yield?
  Mr. SPRATT. I yield to the gentleman from North Carolina.
  Mr. ETHERIDGE. Mr. Speaker, I want to make sure I understand the 
gentleman and the gentleman from Oregon (Mr. Blumenauer). Is the 
gentleman saying the public debt is going to continue to increase?
  Mr. SPRATT. Mr. Speaker, no question about it. This year for the 
second year in 3 years, we will have a mammoth increase in the debt. 
Last year alone we had a 1-year increase of $900 billion in the debt. 
We will have to increase that debt limit again before we leave here 
this year, or we will be perilously close to bumping the ceiling.
  I yield to the gentleman from Oregon (Mr. Blumenauer).
  Mr. BLUMENAUER. Mr. Speaker, just one other thing. I did have a few 
comments I wanted to share, but I wanted to get the context set here. 
Would the gentleman comment about what happens with the massive amount 
of extra Social Security that we are collecting. As the gentleman 
knows, Mr. Greenspan famously of late suggested that we might have to 
cut Social Security benefits along with making these tax cuts 
permanent.
  Mr. SPRATT. Mr. Speaker, the gentleman has been here for some time, 
and he knows that during the late 1990s and in the early years of this 
century, we all took solemn vows out here, different forms. We had 
something called the ``lockbox,'' corny title, serious subject, because 
essentially what he said was that now that we finally have a surplus 
for the first time in 30 years, we are going to foreswear forever 
borrowing from the Social Security and Medicare trust funds again. 
Those trust funds have been building up balances in anticipation of the 
retirement of the baby boomers ever since 1983. And ever since 1983 
until about the year 2000 when we finally hit surplus, we have borrowed 
to make ends meet from the Social Security trust fund. We have given 
the trust fund a bond back, but in effect the government has borrowed 
from these trust funds.
  Both Houses, both parties, everybody subscribed to the notion that we 
should quit that practice. Guess what? The Bush administration's budget 
every year that we have a projection from OMB or CBO, regardless of who 
it may be, everybody projects that every year fully the budget will 
consume the Social Security trust fund surplus and the Medicare trust 
fund surplus. And they are not small numbers; $160 billion for Social 
Security, 20 to $30 billion per year for Medicare. Every year, every 
year, when we give the number $521 billion, we have already taken the 
surplus in those two trust fund accounts, consolidated it with the 
other accounts which are in the red, in deficit, and offset or 
diminished the deficit by the amount of the surpluses this year.
  Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's clarifying 
that because as disturbing as the previous chart was----
  Mr. SPRATT. It is actually worse.
  Mr. BLUMENAUER. Talking about locking us into $500 billion up to 
maybe improve up to $350 or $370 billion and then trailing off again to 
that half trillion dollar level, what, in fact, if I understand what 
the gentleman is saying, that we are consuming, on top of that, all of 
the Social Security surplus; so actually it is approaching, over the 
life of what we can project with reasonable accuracy, a trillion 
dollars in ultimate debt compounded, this is added, year after year 
after year.
  Mr. SPRATT. Mr. Speaker, the gentleman is absolutely correct.
  Mr. BLUMENAUER. Mr. Speaker, I did want to commend the gentleman for 
taking the time to focus in on this critical element of why we are 
really hung up. The Republican House and the Republican Senate cannot 
really reconcile what they want to do with the budget resolution 
because they are unable to agree amongst themselves about how far to 
extend these PAYGO rules.

                              {time}  2115

  I would like to say that I think anybody in America listening to what 
you brought forth here this evening needs to understand what the stakes 
are and why people should be rooting for the other body in extending 
this important principle across the board, spending as well as 
taxation.
  I am of the opinion that this does not have to be a partisan issue. 
Like most Members, I was back in my district for 2 weeks, morning, noon 
and night, listening to people from all walks of life, and with 
particular attention on April 15, on tax day, and I found that the 
people understood what the gentleman is talking about at several 
levels.
  Everybody would like dessert, a tax cut, but they understand that 
this budget is hemorrhaging red ink. They understand the debt tax that 
is already over $4,000 for a family of four right now, moving towards 
$7,000 in just a few years. But that is the tip of the iceberg, because 
if interest rates start to spike, and I agree with my colleague from 
North Carolina, it is miraculously not going to happen before election 
day, but as sure as we are standing here, they are going to be moving 
relentlessly upward next year. And, again, our colleague pointed out 
how much of this debt is in foreign hands, increasingly Chinese, where 
we lose control over people who are involved with our debt markets.
  Mr. SPRATT. Mr. Speaker, reclaiming my time, just for clarification 
and an additional point, one beneficial result of our fiscal policies 
in the 1990s was that we brought down the national debt by $400 billion 
between 1998 and 2001. We also, because the government was not 
borrowing money, but actually putting money into the pool of savings in 
this country, helped bring down interest rates. As a result, debt 
service, the interest paid on the national debt, net interest paid on 
the national debt, dropped from around $240 billion to $250 billion a 
year to about $160 billion a year. That is a dividend that we had 
available to do things that people needed and wanted us to do.
  Because of the Bush administration policies, that interest payment is 
going to go up steadily, so that 10 years from now, if we follow the 
course that CBO plots for the President's budget in its March analysis, 
debt service, interest paid on the national debt, will be close to $370 
billion. It will more than double from its current level.
  What does that do? That is $370 billion we will not have for 
education in North Carolina where the gentleman from North Carolina 
(Mr. Etheridge) used to be the superintendent of education. That is 
$300 billion we will not have for the environment in Oregon, which is a 
near and dear thing to the heart of the gentleman.
  Furthermore, it builds a sort of cynicism about our government, 
because people will pay substantial taxes. These are not tax cuts. When 
you are borrowing the money to finance the tax cut, you are just 
postponing the event, the inevitable. What will happen is people will 
be paying more in debt taxes and not seeing anything in return for it, 
and they become cynical of our government, because so much of what they 
pay in taxes goes up in smoke, so to speak, because it goes to interest 
payments.
  Mr. BLUMENAUER. Mr. Speaker, I would just conclude with two points, 
because I agree with what the gentleman is saying, it resonates with 
me, and I am quite confident that it resonates on the part of most 
Americans who are dealing with this as a kitchen table issue. They 
would rather have their debt tax cut, reduce those deficits, than have 
a couple of dollars in a tax cut that really does not accrue to most 
average Americans.
  I want to just indicate that there are two lines of argument that I 
find fully specious, one being that somehow this PAYGO concept, pay as 
you go, for expenditures of the budget or tax expenditures, is somehow 
biased against cutting the budget. I think if we require the people 
running around here who want to cut taxes to have to pay for it, it 
will actually make it more likely that spending will be cut, not less. 
I must confess that the gentleman's rule, as I read it, is agnostic as 
to

[[Page 7055]]

whether taxes should be cut or not. It is just you pay for it.
  I happen to want to cut the alternative minimum tax, which is 
creeping up on American families and is going to hit them like a 
sledgehammer over the course of the next couple of years. But I think, 
in fairness, people who care about that ought to be required to offset 
it in some fashion.
  I appreciate the work the gentleman is doing and the opportunity to 
join the gentleman in this important conversation this evening.
  Mr. SPRATT. I thank the gentleman for participating.
  I yield to the gentleman from North Carolina (Mr. Etheridge).
  Mr. ETHERIDGE. Mr. Speaker, I have just a question, if I may, on 
clarification as we get ready to wind down, because I want to make sure 
I understand what the gentleman said earlier.
  Did I understand the gentleman to say that President Bush inherited a 
projected $6.6 trillion surplus?
  Mr. SPRATT. Mr. Speaker, $5.6 trillion was the estimate of the 
surplus by his own budget shop, the Office of Management and Budget, 
$5.6 trillion between 2002 and 2011.
  Mr. ETHERIDGE. Whether that was accurate or not, I am not going to 
get into that.
  Mr. SPRATT. It turns out it was not. Now they have recanted and said 
it was probably overstated by 55 percent.
  Mr. ETHERIDGE. Did he not also promise during the campaign when he 
came in office to protect Social Security and not invade it?
  Mr. SPRATT. Everybody promised. Both parties, both the White House 
and the Congress, promised that never again, now that we were finally 
in this position, would we borrow from Social Security and spend the 
proceeds again. But that is the inevitable consequence. When you reduce 
that $5.6 trillion projected surplus by 55 percent, the result is about 
$2.6 trillion instead of $5.6 trillion. That $2.6 trillion is roughly 
equal to what is in the Social Security Trust Fund, so if you wanted to 
keep your promise now that you have adjusted downward the realistic 
estimate of the surplus, there was no room for additional tax cuts 
without violating that solemn promise never again to dip into the 
Social Security Trust Fund to pay for the operation of the government.
  Mr. ETHERIDGE. I thank the gentleman for his clarification. I think 
folks understand that.
  Mr. SPRATT. Mr. Speaker, I would just like to make a few points in 
closing about the budget.
  It is often said, particularly by the President and by others, that 
we have had an explosion of spending. Indeed, there has been an 
increase in spending, a big increase in spending, in the last 3 years. 
But this chart, these four bar graphs show that 90 to 95 percent of the 
increase in spending over the last 4 years has occurred in defense, 
homeland security, an account that did not even exist in the budget a 
couple of years ago, our response to 9/11, the bailout of New York 
City, the bailout of the airlines, and this is where most of the 
spending growth remains in the budget.
  The President has a budget which he claims will cut the deficit in 
half in 5 years, but he leaves out one major element, among others: He 
makes no provision for what it will cost to maintain 125,000 to 135,000 
troops in Iraq and another 12,000 in Afghanistan. When the cost of that 
is added to it, he does not come anywhere close to his claim of cutting 
the deficit in half over 5 years.
  The President has also said the tax cuts were necessary because we 
have had horrendous job losses, and it is true. Our economy went into 
recession in March of 2001 and came out in November of 2001. It was a 
short and shallow recession, but the effect on jobs has persisted. This 
is the first administration since the Hoover administration not to see 
a substantial increase in jobs during its tenure. We have had a loss in 
the private sector of 2.7 million jobs, unrecovered since the start and 
duration of the recession.
  So what has happened, despite the $2 trillion to $3 trillion in tax 
cuts measured over 10 years that we have had in 2001, 2002 and 2003 
under the Bush administration, this is the curve here for what the 
postwar recession typically has been. It has lasted about 27 months. 
You would have a downturn for 13 or 14 months, an upturn for 13 or 14 
months. By the 27th month, the jobs lost would be regained.
  Look what happened in this recession.
  Notwithstanding three successive substantial tax cuts, we still have 
a loss of 2.7 million jobs in this country. That is a fact. As was 
said, once again, you can look it up. You can get it from the 
Department of Labor.
  One other point I would like to make before closing is Social 
Security and Medicare. One reason that we are so concerned about the 
deficit, the mounting national debt, is that in 2008 we will have a 
demographic change in this country like none we have ever seen. The 
baby-boomers will begin to retire.
  There are 77 million of them marching to their retirement right now. 
They are already born. They are not going anywhere. They will soon be 
claiming Social Security and then their Medicare, and in 10 to 20 years 
the number of people on Medicare and Social Security will almost 
double. The resources required will be substantial for those two 
programs, which are underfunded.
  Most people look at these numbers and say there is no way feasible to 
deal with this problem, we will just have to restructure the programs. 
That means we will have to cut benefits, we will have to reconfigure 
the programs, cut the costs in order to make them affordable.
  In truth, if you look at the first bar graph over here, this big fat 
bar graph of $14.2 trillion at the top, that is the total amount, the 
present value of all the tax cuts that the 2001, 2002 and 2003 tax cut 
laws will necessitate or allow over the next 75 years, 75 years being 
the timeframe we look to make Social Security solvent.
  If you compare the requirements that would be imposed, that are 
imposed to make Social Security solvent and Medicare solvent, the two 
come to $11.9 trillion, the green and the blue here. So the amount of 
these tax cuts over 75 years is actually more than what is required to 
make Social Security and Medicare solvent.
  We can have this. So those who say this is a set of circumstances we 
did not foresee and could not control, here is the answer: These are 
freely chosen policies, and they choose. They choose additional debt, 
additional deficits, over deficit reduction, and they choose tax cuts 
over Social Security solvency.
  There is a choice here. There is a deliberate choice being made. 
Those who today say we are victims of circumstance will say the same 
thing then, but here is the proof right now. If you want to save Social 
Security, the wherewithal is there to do it, if you do not prefer doing 
it otherwise for tax purposes.

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